A revised Merchant Discount Rate (MDR) framework for UPI payments will introduce a 0.02% charge on eligible capital-market transactions from October 15, 2026. The concessional rate will apply to payments involving mutual funds, securities, stockbrokers and other eligible capital-market entities, with the MDR capped at ₹300 per transaction.
The revised structure is separate from the standard 0.4% MDR applicable to specified commercial person-to-merchant (P2M) UPI transactions above ₹2,000. The lower capital-market rate is intended to support continued retail participation in formal financial markets while helping sustain the digital payments ecosystem.
0.02% MDR for Capital-Market Payments
The new concessional rate covers eligible UPI payments connected with capital-market activities. These include transactions involving mutual funds, securities, stockbrokers and dealers. UPI is already used by retail investors for activities such as IPO applications, mutual fund investments and payments associated with brokerage accounts.
At a rate of 0.02%, a ₹1 lakh eligible transaction would generate an MDR of ₹20. The overall MDR remains subject to the ₹300 maximum cap, limiting the charge on larger eligible transactions.
Mutual Fund SIPs and AutoPay Remain Outside the Prescribed MDR
The revised framework does not apply the new capital-market MDR uniformly to every investment-related UPI transaction.
According to the Business Today report, UPI Mandates and AutoPay transactions, including recurring mutual fund SIP payments, will have no prescribed MDR under the new framework. One-time mutual fund payments and eligible equity or debt-market payments will instead fall under the 0.02% category, subject to the applicable cap.
This distinction means investors using recurring UPI mandates for SIPs may not face the same MDR treatment as investors making one-time capital-market payments.
How the New UPI Rates Differ
The revised structure creates different MDR categories depending on the type of transaction.
| UPI Payment Category | MDR From October 15, 2026 |
|---|---|
| UPI Mandate / AutoPay | No prescribed MDR |
| Mutual fund SIP through AutoPay | No prescribed MDR |
| Eligible one-time mutual fund payment | 0.02%, capped at ₹300 |
| Eligible equity/debt market payment | 0.02%, capped at ₹300 |
| Eligible broker wallet top-up | 0.02%, capped at ₹300 |
| Eligible insurance payment above ₹2,000 | ₹5 flat MDR |
| Regular eligible P2M payment above ₹2,000 | 0.4% |
| Eligible P2M payment of ₹75,000 or more | 0.4%, capped at ₹300 |
The attached report notes that the capital-market rate is considerably lower than the standard 0.4% MDR applicable to eligible commercial P2M transactions above ₹2,000.
Impact on Investors and Digital Payments
The direct impact on investors will depend partly on how brokers, mutual fund platforms and other intermediaries handle the MDR. If an intermediary absorbs the cost, investors may see little or no direct change. If the cost is passed through, investors could face an additional expense on eligible UPI payments.
NSE Managing Director and CEO Ashishkumar Chauhan said the MDR could affect UPI-routed trading volumes in the short term, with volumes potentially stabilising over time. The report also notes that the effect may be more noticeable for frequent trading-related payments than for occasional or long-term investment transactions.
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UPI MDR Framework to Take Effect From October 15
The new capital-market MDR forms part of a broader revision to UPI's merchant payment framework. While eligible capital-market transactions will receive the lower 0.02% rate, other qualifying merchant transactions above ₹2,000 will generally fall under different MDR categories.
The framework is scheduled to take effect on October 15, 2026, giving financial institutions, payment platforms, brokers, merchants and other participants time to prepare for the revised payment-cost structure.